Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 13, Problem 13.11BE
To determine
Liabilities
Liabilities are referred to as the obligations of the business towards the creditors for operating the business. Liabilities may be short-term or long-term depending upon the time duration in which it is paid back to the creditors.
Liabilities are classified in to current liabilities and long-term liabilities. Current liabilities are those liabilities which need to be paid within a year. Long-term liabilities are those liabilities that have longer maturity period.
To determine: Classification of debt.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
View Policies
Current Attempt in Progress
On December 31, 2023, Green Bank enters into a debt restructuring agreement with Kingbird Inc., which is now experiencing
financial trouble. The bank agrees to restructure a $2-million, 10% note receivable issued at par by the following modifications:
1. Reducing the principal obligation from $2 million to $1.9 million
Extending the maturity date from December 31, 2023, to December 31, 2026
Reducing the interest rate from 10% to 8%
2₁
3.
Kingbird pays interest at the end of each year. On January 1, 2027, Kingbird pays $1.9 million in cash to Green Bank. Kingbird
prepares financial statements in accordance with IFRS 9.
(b)
Prepare an entry at December 31, 2023, based on the results of your calculation. (Round answers to 0 decimal places, e.g. 5,275.
Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts.…
Problem 12
On December 31, 2019, Magtuba Company finished consultation services and accepted in exchange a promissory note with a face value of P300,000, a due date of December 31, 2022, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%.
The service revenue to be recognized for the year ended December 31, 2019 is
The carrying amount of the note receivable as of December 31, 2020 is
Problem 12
On December 31, 2019, Magtuba Company finished consultation services and accepted in
exchange a promissory note with a face value of P300,000, a due date of December 31, 2022,
and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the
services is not readily determinable and the note is not readily marketable. Under the
drcumstances, the note is considered to have an appropriate imputed rate of interest of 10%.
13. The service revenue to be recognized for the year ended December 31, 2019 is
14. The carrying amount of the note receivable as of December 31, 2020 is
Chapter 13 Solutions
Intermediate Accounting
Ch. 13 - What are the essential characteristics of...Ch. 13 - Prob. 13.2QCh. 13 - Bronson Distributors owes a supplier 100,000 on...Ch. 13 - Bank loans often are arranged under existing lines...Ch. 13 - Prob. 13.5QCh. 13 - Prob. 13.6QCh. 13 - Salaries of 5,000 have been earned by employees by...Ch. 13 - Prob. 13.8QCh. 13 - Prob. 13.9QCh. 13 - Prob. 13.10Q
Ch. 13 - Prob. 13.11QCh. 13 - Prob. 13.12QCh. 13 - Long-term obligations usually are reclassified and...Ch. 13 - How do IFRS and U.S. GAAP differ with respect to...Ch. 13 - Prob. 13.15QCh. 13 - Prob. 13.16QCh. 13 - Prob. 13.17QCh. 13 - Prob. 13.18QCh. 13 - Suppose the analysis of a loss contingency...Ch. 13 - Prob. 13.20QCh. 13 - Distinguish between the accounting treatment of a...Ch. 13 - At December 31, the end of the reporting period,...Ch. 13 - After the end of the reporting period, a...Ch. 13 - Prob. 13.24QCh. 13 - Prob. 13.25QCh. 13 - Prob. 13.26QCh. 13 - Prob. 13.27QCh. 13 - Prob. 13.28QCh. 13 - Bank loan; accrued interest LO132 On October 1,...Ch. 13 - Non-interest-bearing note; accrued interest LO132...Ch. 13 - Determining accrued interest LO132 On July1,...Ch. 13 - Commercial paper LO132 Branch Corporation issued...Ch. 13 - Non-interest-bearing note; effective interest rate...Ch. 13 - Prob. 13.6BECh. 13 - Advance collection LO133 In Lizzie Shoes...Ch. 13 - Sales tax LO133 DuringDecember, Rainey Equipment...Ch. 13 - Classifying debt LO134 Consider the following...Ch. 13 - Prob. 13.10BECh. 13 - Prob. 13.11BECh. 13 - Prob. 13.12BECh. 13 - Prob. 13.13BECh. 13 - Contingency LO135, LO136 Skill Hardware is the...Ch. 13 - Contingency LO135, LO136 Bell International can...Ch. 13 - Prob. 13.16BECh. 13 - Prob. 13.17BECh. 13 - Unasserted assessment LO135, LO136 At March 13,...Ch. 13 - Bank loan; accrued interest LO132 On November 1,...Ch. 13 - Determining accrued interest in various situations...Ch. 13 - Short-term notes LO132 The following selected...Ch. 13 - Paid future absences LO133 JWS Transport Companys...Ch. 13 - Paid future absences LO133 On January 1, 2018,...Ch. 13 - Prob. 13.6ECh. 13 - Customer deposits LO133 Diversified...Ch. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - FASB codification research LO133, LO134, LO135...Ch. 13 - Current noncurrent classification of debt; Sprint...Ch. 13 - Prob. 13.12ECh. 13 - Current noncurrent classification of debt LO131,...Ch. 13 - Prob. 13.14ECh. 13 - Warranties LO135, LO136 Cupola Awning Corporation...Ch. 13 - Extended warranties LO135, LO136 Carnes...Ch. 13 - Prob. 13.17ECh. 13 - Impairment of accounts receivable LO135, LO136...Ch. 13 - Prob. 13.19ECh. 13 - Various transactions involving contingencies ...Ch. 13 - Prob. 13.21ECh. 13 - Prob. 13.22ECh. 13 - Disclosures of liabilities Indicate (by letter)...Ch. 13 - Warranty expense; change in estimate LO135, LO136...Ch. 13 - Change in accounting estimate LO133 The...Ch. 13 - Contingency; Dow Chemical Company disclosure ...Ch. 13 - Payroll-related liabilities Appendix Lee...Ch. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Current noncurrent classification of debt LO131,...Ch. 13 - Various liabilities LO131 through LO134 The...Ch. 13 - Bonus compensation; algebra LO133 Sometimes...Ch. 13 - Various contingencies LO135, LO136 Eastern...Ch. 13 - Prob. 13.7PCh. 13 - Expected cash flow approach; product recall LO136...Ch. 13 - Subsequent events LO136 Lincoln Chemicals became...Ch. 13 - Subsequent events; classification of debt; loss...Ch. 13 - Prob. 13.11PCh. 13 - Various liabilities; balance sheet classification;...Ch. 13 - Payroll-related liabilities Appendix Alamar...Ch. 13 - Prob. 13.1BYPCh. 13 - Prob. 13.3BYPCh. 13 - Prob. 13.4BYPCh. 13 - Prob. 13.5BYPCh. 13 - Prob. 13.7BYPCh. 13 - Prob. 13.8BYPCh. 13 - Judgment Case 139 Loss contingency and full...Ch. 13 - Prob. 13.10BYPCh. 13 - Prob. 13.12BYPCh. 13 - Prob. 13.13BYPCh. 13 - Prob. 13.14BYPCh. 13 - Prob. 13.15BYPCh. 13 - Prob. 13.16BYPCh. 13 - Prob. 13.18BYPCh. 13 - Real World Case 1319 Contingencies LO135 Real...Ch. 13 - Real World Case 1320 Contingencies and Subsequent...Ch. 13 - Prob. 1CCTCCh. 13 - Prob. 1CCIFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- E 15-4 Sales-type lease; lessor; balance sheet and income statement effects • LO15-2 On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Inc. at a cost of $3 million. Required: 1. What amount related to the lease would IC report in its balance sheet at December 31, 2021 (ignore taxes)? 2. What amount related to the lease would IC report in its income statement for the year ended December 31, 2021 (ignore taxes)?arrow_forwardProblem 25Davao Bank loaned P7,500,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1, 2023, plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make its 2020 interest payment and Davao Bank considers the loan impaired and projects the cash flows from the loan as of December 31, 2020. The bank has accrued the interest at December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Date of cash flow Amount projectedas of Dec. 31, 2020December31, 2021 500,000December31, 2022 1,000,000December31, 2023 2,000,000December31, 2024 4,000,000The present value at l2% is as follows:For one period 0.89For two periods 0.80For three periods 0.71For four periods 0.64 Required:1.Prepare a table of amortization for the loan receivable.2. Prepare journal entries for 2018 – 2024.arrow_forwardExercise 14-20 (Static) Installment note; amortization schedule [LO14-3] American Food Services, Incorporated, acquired a packaging machine from Barton and Barton Corporation. • Barton and Barton completed construction of the machine on January 1, 2024. • In payment for the $4 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. • The payments include interest at the rate of 10%. Required: 1. Prepare the journal entry for American Food Services' purchase of the machine on January 1, 2024. 2. Prepare an amortization schedule for the four-year term of the installment note. 3. Prepare the journal entry for the first installment payment on December 31, 2024. 4. Prepare the journal entry for the third installment payment on December 31, 2026. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers…arrow_forward
- Question 7 36.7A On 1 June 2019 Latchford Construction plc had £3.6 million 4.5% loan notes in issue, interest being paid annually in two instalments on 31 August and 28 February. On 1 October 2019 the company issued a further £1.1 million 3.0% loan notes, interest being paid annually in two instalments on 31 March and 30 September each year. On 31 March 2020 Latchford Construction plc redeemed £1.5 million 4.5% loan notes, paying the interest due to that date. On the basis of the above, what interest expense should appear in the company's Income Statement for its year ended 31 May 2020?arrow_forwardProblem 25 Davao Bank loaned P7,500,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1, 2023, plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make its 2020 interest payment and Davao Bank considers the loan impaired and projects the cash flows from the loan as of December 31, 2020. The bank has accrued the interest at December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Amount projected as of Dec. 31, 2020 500,000 1,000,000 2,000,000 4,000,000 Date of cash flow December31, 2021 December31, 2022 December31, 2023 December31, 2024 The present value at 12% is as follows: For one period 0.89 For two periods For three periods For four periods 0.80 0.71 0.64 Required: 1.Compute the impairment loss of the loan receivable on December 31,2020. 2.Prepare a table…arrow_forwardQuestion 96 Using Financial Statements for 2020, long-term debt to total assets for the year 2020 is 0.23. TRUE OR FALSE?arrow_forward
- Q 12 –Khamis Electronics issues a $700,000, 10-year, 7% mortgage note payable on December 31, 2020, to help finance a plant expansion. The terms of the note provide for semi-annual blended payments of $49,253. Payments are due on June 30 and December 31. Instructions 4 (a). Prepare an instalment payment schedule for the first two years. Round all calculations to the nearest dollar. (b). Prepare the entries for (1) the loan and (2) the first two instalment payments on June 30, 2021, and December 31, 2021. (c). Show how the total mortgage liability should be reported on the balance sheet at December 31, 2021.arrow_forward17- A RO 40000 Interest-bearing note payable is signed on December 26 2020. If the note is a 120-day note what is the maturity date for this short-term liability? a. March 26 b. April 26 c. April 25 d. March 25arrow_forwardPROBLEM 3As a result of a restructuring agreement on January 1, 2018, First Bank agreed tothe following provisions: • The principal obligation is reduced to P7,000,000.• The accrued interest of P640,000 is forgiven.• The date of maturity is extended to December 31, 2021.Annual interest of 10% is to be paid for 4 years every December31.The present value of 1 at 8% for 4 periods is 0.735 and the present value of anordinary annuity of 1 at 8% for 4 periods is 3.31.Requirement:a. What is the gain on extinguishment of debt for 2018?b. What is interest expense for 2018?arrow_forward
- Question 13 Which of the following is the most advantageous for a debtor if he borrowed P15, 000 at 6% from March 15, 2020 to December 20, 2020.? A Exact Interest at Actual Time В Ordinary Interest at Approximate Time Ordinary Interest at Actual Time D Exact Interest at Approximate Timearrow_forwardTestbank Multiple Choice Question 98 On February 10, 2021, after issuance of its financial statements for 2020, Crane Company entered into a financing agreement with Cleveland Bank, allowing Crane Company to borrow up to $7960000 at any time through 2023. Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest rate and mature two years from the date of loan. Crane Company presently has $3000000 of notes payable with Star National Bank maturing March 15, 2021. The company intends to borrow $4950000 under the agreement with Cleveland and liquidate the notes payable to Star National Bank. The agreement with Cleveland also requires Crane to maintain prior approval by Cleveland Bank. From the above information only, the total short-term debt of Crane Company as of the December 31, 2020 balance sheet date is working capital level of $11950000 and prohibits the payment of dividends on common stock without O $ 3990000. O $ 3000000. O $7960000. O $0.arrow_forwardBalance Sheet 3-Dudes, Inc. Liabilities & Owners' Equity: Assets: 2021 2022 $22,000 $18,000 $26,000 $30,000 $28,000 $31,000 $76,000 $79,000 2022 $45,000 $220,000 $195,000Notes Pay $27,000 $292,000 $246,000Total CL 2021 Cash $21,000Accts Pay Accts. Rec. $30,000Other CL Inventories Total CA $600,000 $570,000LT Debt -$210,000 -$190,000Total Liab $390,000 $380,000 $285,000 $250,000 $361,000 $329,000 PP&E Depreciation Net PP&E $80,000 $80,000 Equity $626,000Ret Earn. Total equity Total Liab+EQ $241,000 $217,000 $321,000 $297,000 $682,000 $626,000 Total Assets $682,000 Simplified Income Statement - 2022 3-Dudes, Inc $1,200,000 -$470,000 $730,000 Revenue Cost of Goods Sold Gross Profit Operating Expenses (G&A): Earnings before interest and taxes (EBIT) Interest charges: Earnings before taxes (EBT) Taxes -$260,000 $470,000 -$28,000 $442,000 -$132,600 $309,400 Net Incomearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENTIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning